In a recent survey conducted by Xero, the global small business platform, concerning AI adoption, it was found that 89% of small business owners in Singapore are worried that AI development is outpacing regulation. This concern arises as generative AI tools become more prevalent in various industries and the workforce.
Xero’s “Future Focus AI” research gathered insights from over 3,000 small business owners across multiple countries, with 500 small business leaders from Singapore participating. The findings shed light on the sentiments and actions of small businesses in regard to AI.
Ethical Challenges and Privacy Concerns
The study revealed that Singaporean small businesses consider sensitive information disclosure (42%) and data privacy violations (41%) as the most significant ethical challenges related to AI use in their business. Intellectual property infringement closely follows, with 35% citing this as a major ethical concern.
Proactive Steps Towards AI Adoption
Despite their concerns, many small businesses are actively seeking ways to embrace AI. The most common actions taken include experimentation (37%), increased allocation of resources for AI (32%), investment in new AI tools (31%), and collaboration with third-party AI vendors or experts (31%). However, 16% of small businesses have not yet taken any proactive steps in this direction.
Balancing AI Benefits and Risks
Small businesses are considering both the benefits and risks of AI adoption. To manage the risks associated with generative AI tools, businesses are providing training to employees on identifying biases or inaccuracies (37%), obtaining written consent from clients/customers before using AI tools (36%), and establishing policies and guidelines for employees (34%).
However, the survey highlighted a paradox: despite concerns, many small businesses trust AI tools with sensitive data. For instance, 65% trust AI with identifiable customer information, while 62% trust AI with their sensitive commercial information. This suggests a need for more support in assessing security and privacy risks.
Drawbacks of Generative AI Tools
Small businesses reported various drawbacks associated with generative AI tools, including increased biases or inaccuracies in content (32%), reduced headcount due to AI utilization (27%), decreased employee morale (25%), and decreased efficiency due to time spent overseeing the quality control of AI content (19%).
Mixed Sentiments About AI’s Impact
Small businesses appear ambivalent but slightly optimistic about the impact of AI. While 36% express excitement about AI, 23% are anxious, and 22% are intrigued by the technology. The majority (63%) believe AI will be more helpful and have a positive impact on their business, with 23% foreseeing a more harmful effect.
AI’s Expected Impact in the Next Five Years
A significant portion (83%) of small businesses believe AI will have an impact on their business within the next five years, with 38% expecting a “significant impact.” Specifically, 33% believe AI will lead to more efficient business models and workflows, and 25% anticipate new products and services. However, 10% of small businesses are uncertain about AI’s impact on their business.
Small Businesses Embrace AI
Despite concerns, most small businesses plan to incorporate AI further into their operations. Fifty-four percent of small businesses intend to hire fewer people due to AI, and 44% want more than half of their business systems to be supported by AI within the next three years. However, one-third (33%) don’t foresee AI affecting their hiring plans in the near future.
AI Not a Top Priority for Most Small Businesses
In the short term, AI is not a priority for the majority of small businesses. When asked about their concerns for the next 12 months, attracting new customers (54%), growing business revenue (52%), and managing rising costs (45%) topped the list. Only 13% ranked adopting or investing in AI as their top priority for the next year.
The Need for Education and Support
Small businesses expressed a desire for more education and support, with 47% feeling that training and resources on different types of AI and its impact on their business or industry are necessary. Additionally, 48% believe using AI to increase productivity is essential, and 46% prioritize responsible AI practices and ethical considerations.
Xero’s AI Guide for Advisors
To assist accountants and bookkeepers in guiding small businesses through the world of AI, Xero has released the “Future Focus: AI Guide for Accountants and Bookkeepers.” This guide aims to help these professionals make informed choices regarding AI tools, manage associated risks, and harness the benefits for both themselves and their small business clients. Mark Rees, Chief Technology Officer at Xero, emphasized the importance of providing knowledge and tools to ensure small businesses can thrive while incorporating AI safely and effectively.
“We wanted to cut through the hype and fear-mongering and answer a really simple question: what does AI mean for your typical practice? The Xero guide is intended to help accountants and bookkeepers make well informed choices when it comes to using AI tools, to help manage the risks and realise the benefits for them and their small business customers.”
Mark Rees, Chief Technology Officer at Xero
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